Mon­day, August 8, 2022

• Preli­mi­na­ry second quar­ter reve­nue of $6.70 bil­li­on ver­sus out­look of $8.10 billion
• Short­fall ver­sus out­look pri­ma­ri­ly dri­ven by wea­k­er Gam­ing revenue
• Manage­ment to dis­cuss finan­cial results and out­look on Aug. 24 ear­nings call

NVIDIA (NASDAQ: NVDA) today announ­ced sel­ec­ted preli­mi­na­ry finan­cial results for the second quar­ter ended July 31, 2022.

Second quar­ter reve­nue is expec­ted to be appro­xi­m­ate­ly $6.70 bil­li­on, down 19% sequen­ti­al­ly and up 3% from the pri­or year, pri­ma­ri­ly reflec­ting wea­k­er than fore­cas­ted Gam­ing reve­nue. Gam­ing reve­nue was $2.04 bil­li­on, down 44% sequen­ti­al­ly and down 33% from the pri­or year. Data Cen­ter reve­nue was $3.81 bil­li­on, up 1% sequen­ti­al­ly and up 61% from the pri­or year.

The short­fall rela­ti­ve to the May reve­nue out­look of $8.10 bil­li­on was pri­ma­ri­ly attri­bu­ta­ble to lower sell-in of Gam­ing pro­ducts reflec­ting a reduc­tion in chan­nel part­ner sales likely due to macroe­co­no­mic head­winds. In addi­ti­on to redu­cing sell-in, the com­pa­ny imple­men­ted pri­cing pro­grams with chan­nel part­ners to reflect chal­len­ging mar­ket con­di­ti­ons that are expec­ted to per­sist into the third quarter.

Data Cen­ter reve­nue, though a record, was some­what short of the company’s expec­ta­ti­ons, as it was impac­ted by sup­p­ly chain disruptions.

Second quar­ter results are expec­ted to include appro­xi­m­ate­ly $1.32 bil­li­on of char­ges, pri­ma­ri­ly for inven­to­ry and rela­ted reser­ves, based on revi­sed expec­ta­ti­ons of future demand.

“Our gam­ing pro­duct sell-through pro­jec­tions decli­ned signi­fi­cant­ly as the quar­ter pro­gres­sed,” said Jen­sen Huang, foun­der and CEO of NVIDIA. “As we expect the macroe­co­no­mic con­di­ti­ons affec­ting sell-through to con­ti­nue, we took actions with our Gam­ing part­ners to adjust chan­nel pri­ces and inventory.

“NVIDIA has excel­lent pro­ducts and posi­ti­on dri­ving lar­ge and gro­wing mar­kets. As we navi­ga­te the­se chal­lenges, we remain focu­sed on the once-in-a-gene­ra­ti­on oppor­tu­ni­ty to reinvent com­pu­ting for the era of AI,” he said.

“The signi­fi­cant char­ges incur­red in the quar­ter reflect pre­vious long-term purcha­se com­mit­ments we made during a time of seve­re com­po­nent shorta­ges and our cur­rent expec­ta­ti­on of ongo­ing macroe­co­no­mic uncer­tain­ty,” said Colet­te Kress, EVP and CFO of NVIDIA.

“We belie­ve our long-term gross mar­gin pro­fi­le is int­act. We have slo­wed ope­ra­ting expen­se growth, balan­cing invest­ments for long-term growth while mana­ging near-term pro­fi­ta­bi­li­ty. We plan to con­ti­nue stock buy­backs as we fore­see strong cash gene­ra­ti­on and future growth,” she said.

	Q2 FY23 Out­look1	Q2 FY23 Preli­mi­na­ry Results
Reve­nue	$8.10 bil­li­on, plus or minus 2%	$6.70 bil­li­on
Gross mar­gin – GAAP Gross mar­gin – non-GAAP	65.1%, plus or minus 50 bps 67.1%, plus or minus 50 bps	43.7%, plus or minus 50 bps 46.1%, plus or minus 50 bps
Ope­ra­ting expen­ses – GAAP Ope­ra­ting expen­ses – non-GAAP	$2.46 bil­li­on $1.75 billion	$2.42 bil­li­on $1.75 billion
GAAP and non-GAAP other inco­me and expense	$40 mil­li­on expense	$24 mil­li­on and $16 mil­li­on expen­se, respectively
GAAP and non-GAAP tax rate	12.5%, plus or minus 1%, exclu­ding dis­crete items	-35% GAAP (bene­fit) and 2% non-GAAP, inclu­ding dis­crete items

¹ Announ­ced in May 2022 in con­nec­tion with the company’s press release announ­cing its finan­cial results for first quar­ter fis­cal 2023.

Reve­nue by Mar­ket Platform ($ in billions)	Q2 FY23 Preli­mi­na­ry Results	Q/Q	Y/Y
Gam­ing	$2.04	Down 44%	Down 33%
Data Cen­ter	3.81	Up 1%	Up 61%
Pro­fes­sio­nal Visualization	0.50	Down 20%	Down 4%
Auto­mo­ti­ve	0.22	Up 59%	Up 45%
OEM and Other	0.13	Down 12%	Down 66%
Total	$6.70	Down 19%	Up 3%

The preli­mi­na­ry results for the second quar­ter ended July 31, 2022, are an esti­ma­te, based on infor­ma­ti­on available to manage­ment as of the date of this release, and are sub­ject to fur­ther chan­ges upon com­ple­ti­on of the company’s stan­dard quar­ter and year-end clo­sing pro­ce­du­res. This update does not pre­sent all neces­sa­ry infor­ma­ti­on for an under­stan­ding of NVIDIA’s finan­cial con­di­ti­on as of the date of this release, or its results of ope­ra­ti­ons for the second quar­ter. As NVIDIA com­ple­tes its quar­ter-end finan­cial clo­se pro­cess and fina­li­zes its finan­cial state­ments for the quar­ter, it will be requi­red to make signi­fi­cant judgments in a num­ber of are­as. It is pos­si­ble that NVIDIA may iden­ti­fy items that requi­re it to make adjus­t­ments to the preli­mi­na­ry finan­cial infor­ma­ti­on set forth abo­ve and tho­se chan­ges could be mate­ri­al. NVIDIA does not intend to update such finan­cial infor­ma­ti­on pri­or to release of its final second quar­ter finan­cial state­ment infor­ma­ti­on, which is curr­ent­ly sche­du­led for Aug. 24, 2022.

Con­fe­rence Call and Web­cast Information
NVIDIA will host a con­fe­rence call on Wed­nes­day, Aug. 24, at 2 p.m. PT (5 p.m. ET), to dis­cuss its finan­cial results for the second quar­ter of fis­cal year 2023.

The call will be web­cast live (in lis­ten-only mode) on investor.nvidia.com. The company’s pre­pared remarks will be fol­lo­wed by a ques­ti­on-and-ans­wer ses­si­on, which will be limi­t­ed to ques­ti­ons from finan­cial ana­lysts and insti­tu­tio­nal investors.

Ahead of the call, NVIDIA will pro­vi­de writ­ten com­men­ta­ry on its second-quar­ter results from its CFO, Colet­te Kress. This mate­ri­al will be pos­ted to investor.nvidia.com imme­dia­te­ly after the company’s results are publicly announ­ced at appro­xi­m­ate­ly 1:20 p.m. PT.

The web­cast will be recor­ded and available for replay until the company’s con­fe­rence call to dis­cuss finan­cial results for its third quar­ter of fis­cal year 2023.

Non-GAAP Mea­su­res
In addi­ti­on to U.S. GAAP finan­cial mea­su­res, this press release includes preli­mi­na­ry esti­ma­tes of non-GAAP mea­su­res of cer­tain com­pon­ents of finan­cial per­for­mance. The­se preli­mi­na­ry esti­ma­tes of non-GAAP mea­su­res include non-GAAP gross mar­gin, ope­ra­ting expen­ses, other inco­me and expen­se, and inco­me tax expense.

The­se non-GAAP finan­cial mea­su­res exclude stock-based com­pen­sa­ti­on expen­se, acqui­si­ti­on-rela­ted and other cos­ts, gains or los­ses from non-affi­lia­ted invest­ments, inte­rest expen­se rela­ted to amor­tiza­ti­on of debt dis­count and the asso­cia­ted tax impact of the­se items, whe­re applicable.

A preli­mi­na­ry updated recon­ci­lia­ti­on of GAAP to non-GAAP gross mar­gin, ope­ra­ting expen­ses, other inco­me and expen­ses and tax rate is as follows:

Recon­ci­lia­ti­on of GAAP to non-GAAP Finan­cial Measures ($ in millions)	Q2 FY23 Preli­mi­na­ry Results
GAAP gross margin	43.7%
Stock-based com­pen­sa­ti­on expen­se, acqui­si­ti­on-rela­ted cos­ts, and other costs	2.4
Non-GAAP gross margin	46.1%
GAAP ope­ra­ting expenses	$2,416
Stock-based com­pen­sa­ti­on expen­se and acqui­si­ti­on-rela­ted costs	(667)
Non-GAAP ope­ra­ting expenses	$1,749
GAAP other expen­se, net	$24
Los­ses from non-affi­lia­ted invest­ments and other costs	(8)
Non-GAAP other expen­se, net	$16
GAAP tax rate (bene­fit)	(35%)
Tax impact of non-GAAP adjustments	37
Non-GAAP tax rate	2%

NVIDIA belie­ves the pre­sen­ta­ti­on of its non-GAAP finan­cial mea­su­res enhan­ces the user’s over­all under­stan­ding of the company’s finan­cial per­for­mance. The pre­sen­ta­ti­on of the company’s non-GAAP finan­cial mea­su­res is not meant to be con­side­red in iso­la­ti­on or as a sub­sti­tu­te for the company’s finan­cial results pre­pared in accordance with GAAP, and the company’s non-GAAP mea­su­res may be dif­fe­rent from non-GAAP mea­su­res used by other companies.

About NVIDIA
Sin­ce its foun­ding in 1993, NVIDIA (NASDAQ: NVDA) has been a pio­neer in acce­le­ra­ted com­pu­ting. The company’s inven­ti­on of the GPU in 1999 spark­ed the growth of the PC gam­ing mar­ket, rede­fi­ned com­pu­ter gra­phics and igni­ted the era of modern AI. NVIDIA is now a full-stack com­pu­ting com­pa­ny with data-cen­ter-sca­le offe­rings that are res­ha­ping indus­try. More infor­ma­ti­on at https://nvidianews.nvidia.com/.

Cer­tain state­ments in this press release inclu­ding, but not limi­t­ed to, state­ments as to: NVIDIA’s preli­mi­na­ry results for the second quar­ter of fis­cal 2023; our excel­lent pro­ducts and posi­ti­on dri­ving lar­ge and gro­wing mar­kets; chal­len­ging mar­ket con­di­ti­ons expec­ted to per­sist into the third quar­ter; our expec­ta­ti­on that the macroe­co­no­mic con­di­ti­ons affec­ting sell-through will con­ti­nue; our focus on the once-in-a-gene­ra­ti­on oppor­tu­ni­ty to reinvent com­pu­ting for the era of AI; our belief that our long-term gross mar­gin pro­fi­le is int­act; slo­wing ope­ra­ting expen­se growth, balan­cing invest­ments for long-term growth while mana­ging near-term pro­fi­ta­bi­li­ty; our plan to con­ti­nue stock buy­backs; our belief in our strong cash gene­ra­ti­on abili­ties and future growth; and NVIDIA’s quar­ter-end finan­cial clo­se pro­cess and pre­pa­ra­ti­on of finan­cial state­ments for the quar­ter are for­ward-loo­king state­ments that are sub­ject to risks and uncer­tain­ties that could cau­se results to be mate­ri­al­ly dif­fe­rent than expec­ta­ti­ons. Important fac­tors that could cau­se actu­al results to dif­fer mate­ri­al­ly include: glo­bal eco­no­mic con­di­ti­ons; our reli­ance on third par­ties to manu­fac­tu­re, assem­ble, packa­ge and test our pro­ducts; the impact of tech­no­lo­gi­cal deve­lo­p­ment and com­pe­ti­ti­on; deve­lo­p­ment of new pro­ducts and tech­no­lo­gies or enhance­ments to our exis­ting pro­duct and tech­no­lo­gies; mar­ket accep­tance of our pro­ducts or our part­ners’ pro­ducts; design, manu­fac­tu­ring or soft­ware defects; chan­ges in con­su­mer pre­fe­ren­ces or demands; chan­ges in indus­try stan­dards and inter­faces; unex­pec­ted loss of per­for­mance of our pro­ducts or tech­no­lo­gies when inte­gra­ted into sys­tems; as well as other fac­tors detail­ed from time to time in the most recent reports NVIDIA files with the Secu­ri­ties and Exch­an­ge Com­mis­si­on, or SEC, inclu­ding, but not limi­t­ed to, its annu­al report on Form 10‑K and quar­ter­ly reports on Form 10‑Q. Copies of reports filed with the SEC are pos­ted on the company’s web­site and are available from NVIDIA wit­hout char­ge. The­se for­ward-loo­king state­ments are not gua­ran­tees of future per­for­mance and speak only as of the date hereof, and, except as requi­red by law, NVIDIA dis­claims any obli­ga­ti­on to update the­se for­ward-loo­king state­ments to reflect future events or circumstances.

© 2022 NVIDIA Cor­po­ra­ti­on. All rights reser­ved. NVIDIA and the NVIDIA logo are trade­marks and/or regis­tered trade­marks of NVIDIA Cor­po­ra­ti­on in the U.S. and/or other count­ries. Other com­pa­ny and pro­duct names may be trade­marks of the respec­ti­ve com­pa­nies with which they are asso­cia­ted. Fea­tures, pri­cing, avai­la­bi­li­ty, and spe­ci­fi­ca­ti­ons are sub­ject to chan­ge wit­hout notice.